WEEKLY INFLATION AT 4.95%
The annual rate of inflation, calculated on point to point basis, stood at 4.95 percent for the week ended 26/02/2005 as against 4.83 percent for the previous week and 5.21 percent during the corresponding week of the previous year, according to the provisional release by the Central Stastical Organization.
The official Wholesale Price Index for 'All Commodities' (Base: 1993-94 = 100) for the week ended 26th February, 2005 declined by 0.1 percent to 188.7 (Provisional) from 188.8 (Provisional) for the previous week.
The index for primary articles, which carries weight of 22% declined by 0.4 percent to 185.1 (Provisional) from 185.8 (Provisional) for the previous week. The index for 'Food Articles' group declined by 0.4 percent to 184.4 (Provisional) from 185.2 (Provisional) for the previous week due to lower prices of poultry chicken (6 %), ragi (3%), urad (2%) and eggs, fruits & vegetables, condiments & spices and milk (1% each). However, the prices of bajra, maize, gram and jowar (1% each) moved up.
The index for 'Non-Food Articles' group declined by 0.4 percent to 179.9 (Provisional) from 180.6 (Provisional) for the previous week due to lower prices of niger seed (4 %), copra and coir fibre (3% each), raw silk and raw cotton (2% each) and rape & mustard seed, groundnut seed and fodder (1% each). However, the prices of castor seed (4%), raw rubber (3%) and gingelly seed and raw jute (1% each) moved up.
The index for the manufactured goods group rose by 0.1 percent to 167.6 (Provisional) from 167.5 (Provisional) for the previous week. The index for fuel power, light and lubricants with a weight of 14.23%p rose marginally to 289.0 (Provisional) from 288.9 (Provisional) for the previous week due to higher prices of coke (64%).
INDIA SIGNS OIL EXPLORING AGREEMENT WITH VENEZUELA
Aiming to widen its expedition for long-term energy security, India has signed an agreement to explore and develop oil projects in Venezuela on March 8, 2005 in New Delhi. Venezuela is the world's fifth-largest oil producer.
The officials signed the deal in the presence of Hugo Chávez, Venezuelan president, and Manmohan Singh, India's prime minister. The agreement offers state-owned Oil and Natural Gas Corporation a 49 per cent stake in the South American San Cristobal oilfield.
India's ONGC will join with Venezuelan national oil firm Petroleos de Venezuela in exploiting San Cristobal, which has the potential to produce 100,000 oil barrels per day. The venture follows several years of diplomatic talks between the two countries. Mr Chávez, on a four- day visit to India, said that Venezuela wanted to become a long-term supplier of crude oil to India, which imports more than 70 per cent of its oil needs, mostly from the volatile Gulf.
India's expanding economy, and its surging demand for energy, has fuelled a frenetic search to secure long-term energy supplies in new areas such as the Sudan, Russia, Burma, Australia and now South America.
RED ALERT TIME FOR INVESTORS; BLAME IT ON MARKET VOLATILITY
The National Stock Exchange (NSE) and The Stock Exchange, Mumbai (BSE), on Thursday have alarmed the investors and market participants to remain cautious in the wake of heightened market activity and intense instability. The warning came even as NSE said it had discovered irregular transactions in the cash market and the derivatives segment.
The interesting thing to note is that the warning came at a time when the markets are thriving and benchmark indices are crossing all-time high levels every day. The two main indices, Nifty of the NSE and the Sensex of The Stock Exchange, Mumbai (BSE) - touched all-time closing highs of 2,168.95 and 6,915.09 respectively on March 8, 2005.
The NSE, in a circular sent to its members on Thursday March 10, 2005, said, "The market has been witnessing increased activity in terms of volumes and various indices have been recording all time highs, which may be due to various underlying factors. While we are sure that members must be exercising caution in executing orders on their own behalf and on behalf of their clients, members are once again advised to be vigilant about the activities of their sub-brokers and clients."
Similarly, BSE also asked members to be careful while registering new clients. It also asked its members to monitor the clients' trading pattern and their past trading record including large concentration in one or few stocks. They have also been asked not to deal with entities, which have been barred from trading by SEBI or other regulatory authorities, failing to do which strict action would be taken against them.
PM PROMISES LAUNCHING NEW GREEN REVOLUTION
The Prime Minister, Dr. Manmohan Singh, has emphasised the Government's commitment to the launching of a "Second Green Revolution". The 'New Deal' aimed at ensuring food and nutritional security of the people, would augment farm incomes and employment. Dr. Singh referred to the new challenge that Governments have to deal with in formulating policy with regard to the food economy, which is the emergence of the private sector, both in research and infrastructure. The Prime Minister also said that the Government would be launching a National Horticulture Mission that is aimed, in part, at stimulating this "Second Green Revolution", in a range of new crops and commodities. Dr. Singh was speaking after laying the foundation stone of the New Delhi office of the International Food Policy Research Institute, on March 8th 2005.
Mr. Joachim von Braun, Director-General of IFPRI and Smt. Isher Judge Ahluwalia, Chair, IFPRI, Board of Trustees, Prof. Gulati of IFPRI were among those present on the occasion.
SMALL TRADERS WILL FACE LESSER BURDEN UNDER VAT
Tax liability of small traders under the proposed value added tax (VAT) regime will most probably be reduced further. The empowered committee of state finance ministers, which met on Tuesday, March, decided on a modified composition scheme to give substantial relief to traders with a turnover of up to Rs 50 lakh.
This step was undertaken to make transition to VAT from April 1 smoother. The states have also agreed not to impose penal provisions for violation of VAT in the first six months.
Empowered committee chairman Asim Dasgupta said that VAT would be implement by states from the beginning of next month despite Uttar Pradesh's reluctance.
"Make no mistakes about it. VAT will not be deferred, irrespective of whether Uttar Pradesh joins or not," Mr Dasgupta said. Under the composition scheme worked out initially, small dealers with an annual gross turnover of up to Rs 50 lakhs had the option of paying tax on a small percentage of the gross turnover. The option could be exercised if they do not pay VAT.
The new scheme will allow traders to pay the tax at a small percentage of the net turnover instead of the gross turnover. This will be calculated after netting out the turnover of exempt items. If a dealer has a gross annual turnover of, say Rs 45 lakh, of which Rs 25 lakh is the turnover from an exempt item like foodgrain, he will have to pay tax at a small percentage of Rs 20 lakh. This could be 1% of Rs 20 lakh.
The other inducement offered to traders is non-enforcement of penal provisions in the first six months. Since VAT is based on self-assessment, officials will not visit the premises of traders without the explicit order of the commissioner of commercial taxes. Uttar Pradesh, Tamil Nadu and Jharkand are among the states, which are yet to give their final word on implementing VAT.
ECB NORMS MAY BECOME MORE LIBERAL, CORP. FRIENDLY
According to statement made by Government officials, norms for governing external commercial borrowings (ECBs) may get relaxed. This measure will enable Indian corporate reach higher foreign capital at low cost.
Also, an appraisal is in progress to remove restrictions on foreign currency convertible bonds (FCCBs) for which announcement will be made at an appropriate time, UK Sinha, joint secretary (foreign direct investment and ECB) in the finance ministry, said at an Assoc ham seminar on Foreign Exchange Management Act.
Mr Sinha said there was a need to soften the restrictive measures on FCCBs under FEMA. He further added that his ministry was in favour of a ceiling on restricted rate of interest for overseas borrowings for India Inc so that they can access these borrowings at lower cost and high cost external borrowing is discouraged.
Since the present ECB norms are too restrictive to encourage Indian corporates raise substantial borrowings from overseas, the officials in the ministry are actively reviewing the issue, he said.
At the same time he made it clear that the government would not allow open interest rate regime in ECBs in view of East Asian meltdown, caused by high interest rates and short interval of such borrowings in late '90s.
He was replying to a question as to whether the current ceiling of 300 basis points above Libor on ECBs beyond 10 years is relevant to the changing needs of the economy. Reminding the participants that East Asian crisis was caused by high cost and short tenure of external borrowings, Mr Sinha said, "I don't think the RBI would accept the suggestion that there should be no cap on ECBs."
He said the country takes pride in conservatism in forex policy as unless careful options are exercised, temporary abundance in forex may be misleading.
However, the requirement of trade and industry regarding forex should also be taken into account, the finance ministry official said. "The government is open to suggestion on unshackling the economy and making Indian industry competitive," he said.
Mr Sinha said even under the existing FEMA, the response of FDI and FIIs towards the Indian economy is not poor. This does not mean that some of FEMA provisions should not be modified, he said.
NEW LAW ON SEZs LIKELY
Union Minister of Commerce & Industry Kamal Nath has said that he would soon be presenting before Parliament the new law on Special Economic Zones (SEZs), as part of the government's focus on improving the investment climate in India through a series of legal measures.
He made the statement while inaugurating the India Trade and Investment Forum on "The Resurgent India: It's Challenges & Opportunities", organised jointly by the Confederation of Indian Industry (CII), Commonwealth Business Council (CBC) and the Department of Industrial Policy Promotion (DIPP) on March 10th, 2005.
He pointed out that the Indian economy was among the fastest growing economies in the world, with average GDP growth in the last ten years of 7%. India's exports were set to cross 75 billion dollars, growing at over 25% per annum, despite a strengthening rupee.
"The Foreign Trade Policy that I announced in August last year seeks to double India's share in global merchandise trade, and to reach a level of exports of 150 billion dollars four years from now. Increased foreign trade is a critical element of our economic strategy as it generates economic activity which is incremental, resulting in greater employment generation, which is one of our principal goals", he said.
The 16-point Action Programme for Investment endorsed in the 2002 CHOGM already lays down principles for governments and businesses to promote investment among member states. These relate to fostering favorable business environments by governments and for better corporate governance for companies.
"My Ministry would be happy to explore possibilities for expanding these facilities by hosting or promoting further such conferences and forum through the special programmes that we are conducting to foster trade and investment links in emerging markets", he said.
Underlining the importance of the collective Commonwealth voice in multilateral trade bodies such as the World Trade Organisation (WTO) since Commonwealth account for 40% of WTO membership, Shri Kamal Nath observed that greater cooperation on trade policy issues through the Commonwealth Forum could speed up the process of the Doha Development Agenda.
INDIA'S TELE DENSITY GROWING
The number of people having phone have gone up to 51.44 million. The tele-density has touched nine at the end of February, according to data given by telecom regulator TRAI , on March 9, 2005. It means that there are, on average, nine phones for every 100 people.
This shows that India's economic and infrastructure are growing. It is significant improvement as a decade ago, India's teledensity was less than one phone for 100 people. After private sector was allowed there has been a significant rise in the number of phone connections.
Of the total 97.03 million phone connections in India by February end, 51.44 million were mobiles - both GSM as well as CDMA - and 45.59 million were landlines. India has 1.08 billion people.
During the 11 months of current fiscal, 20.85 million subscribers joined India's telecom networks, riding the big growth in cellular telephony, which saw 17.84 million additions. In February, 2.11 million subscribers were added to telecom networks.
Of these, 1.67 million were new to mobile networks - 1.13 million on GSM and 0.54 million on CDMA. Landline additions were about 0.39 million.
And , for the first time, TRAI gave out subscriber additions of broadband - the government's new thrust area. There were 50,000 broadband connections in India at the end of December, when BSNL and MTNL launched initiatives to push the service.
Industry estimates suggest that during January and February, 2,00,000 more subscribers have been added, largely on account drastic tariff cuts.